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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................1Chart: Highlights ......................................................................................................................2

1.1 Objectives ...................................................................................................................................21.2 Mission ........................................................................................................................................2

2.0 Company Summary.............................................................................................................................22.1 Company Ownership .................................................................................................................32.2 Start-up Summary ......................................................................................................................3

Chart: Start-up .........................................................................................................................4Table: Start-up Funding ..........................................................................................................5Table: Start-up .........................................................................................................................6

3.0 Services................................................................................................................................................64.0 Market Analysis Summary ..................................................................................................................7

4.1 Market Segmentation ................................................................................................................8Chart: Market Analysis (Pie) ..................................................................................................9Table: Market Analysis ...........................................................................................................9

4.2 Target Market Segment Strategy .............................................................................................94.3 Service Business Analysis .....................................................................................................10

4.3.1 Competition and Buying Patterns .............................................................................105.0 Strategy and Implementation Summary ..........................................................................................11

5.1 Competitive Edge....................................................................................................................115.2 Sales Strategy..........................................................................................................................12

5.2.1 Sales Forecast ............................................................................................................12Chart: Sales Monthly ...................................................................................................13Chart: Sales by Year ...................................................................................................13Table: Sales Forecast.................................................................................................14

5.3 Milestones ................................................................................................................................14Table: Milestones..................................................................................................................14Chart: Milestones ..................................................................................................................15

6.0 Management Summary ....................................................................................................................156.1 Personnel Plan .........................................................................................................................16

Table: Personnel ...................................................................................................................167.0 Financial Plan ....................................................................................................................................17

7.1 Projected Cash Flow ...............................................................................................................17Table: Cash Flow ..................................................................................................................17Chart: Cash ...........................................................................................................................18

7.2 Important Assumptions............................................................................................................18Table: General Assumptions ...............................................................................................18

7.3 Break-even Analysis................................................................................................................18Chart: Break-even Analysis .................................................................................................19Table: Break-even Analysis .................................................................................................19

7.4 Projected Profit and Loss .......................................................................................................19Chart: Profit Yearly ................................................................................................................20Chart: Gross Margin Monthly ...............................................................................................20Chart: Gross Margin Yearly..................................................................................................21Table: Profit and Loss ..........................................................................................................21Chart: Profit Monthly .............................................................................................................22

7.5 Projected Balance Sheet ........................................................................................................23

Table of Contents

Page 2

Table: Balance Sheet ...........................................................................................................237.6 Business Ratios .......................................................................................................................24

Table: Ratios .........................................................................................................................25Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................2Table: General Assumptions ....................................................................................................................3Table: Profit and Loss ...............................................................................................................................4Table: Cash Flow .......................................................................................................................................5Table: Balance Sheet ................................................................................................................................6

Adventure Excursions Unlimited

Page 1

1.0 Executive Summary

Adventure Excursions Unlimited (AEU) was formed to provide hard-adventure sport/travelpackages with upscale accommodations, gourmet food, and celebrity service providers towealthy clients. AEU hard adventures include helicopter-skiing, kayaking, white-water rafting,and mountain biking. The founders of AEU are Jordan Stephan (MBA/JD), Jillyn Certo (MBA),and Loren Harlo (MBA). In addition to their MBA status, they are passionate about theactivities AEU will offer.

An opportunity exists for two reasons:

1. Tourism is a growing industry (4% annually), and within the industry adventure travel isgrowing at 10%.

2. There are few providers of hard-adventure travel to upscale clients.

Virtually all companies that provide "hard" adventure activities appeal to a lower income client.Companies that appeal to a wealthier clientele generally provide "soft" adventure packages.Hard-adventure activities involve difficult physical requirements. They carry a higher level ofrisk than do "soft" activities. Soft adventure activities may involve some physical exertion,however they involve a low level of risk and can be engaged in by non-athletic people.

The company's target customers are high income (min. $75,000 for single person), health-conscious individuals interested in popular hard-adventure sports. These are lawyers, bankers,executives, doctors, etc. The major purchasers are located in urban areas within major UnitedStates cities. Our customers are more likely to be married. 51% are men and 49% are women.

In addition, more niche markets are evolving. Initially, it will be difficult to compete withexperienced providers, especially market leaders. However, AEU's target market is anexploitable niche and our service is differentiated. AEU's target market members will havesimilar activity interests, more disposable income and less sensitivity to price.

AEU will price its services at the top of the market. We will provide a luxury service with prestigevalue. Our prices will be out of reach for the majority of adventure travelers. Service will bepriced based upon luxury competitor prices and the value added of our offering. Providers thatoffer luxury services similar to ours do so at similar prices. We are competitively priced in theluxury market. Because we appeal to a smaller market, volume will be limited. However, we willbe able to capture a higher gross profit margin.


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1.1 Objectives

Adventure Excursions Unlimited's objectives for the first three years of operation include:

· To create a service-based company whose #1 mission is exceeding customers'expectations.

· Capturing 25% market share of the high-end hard-adventure travel space.· To develop a sustainable, profitable business.· To achieve a 35% return rate of customers within the first three years.

1.2 Mission

Adventure Excursions Unlimited's mission is to provide customers with the highest quality outdooradventure. We exist to attract and maintain customers. When we adhere to this maxim,everything else will fall into place.

2.0 Company Summary

Adventure Excursions Unlimited, located in Eugene, OR will offer hard-adventure trips to theupper end of the travel market. AEU will be concentrating on three activities, mountain biking,heli-skiing, and white-water adventures. AEU has chosen these three activities to allow thecompany to not be restricted by seasons, we will have trips occurring through the year. WhileAEU's office is located in Eugene, it will be leading trips throughout the United States, and theworld.


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AEU expects the first several months will be used to plan trips and train trip leaders. By theend of year one the trips should be in full swing and AEU will be building a solid customer base.

2.1 Company Ownership

Adventure Excursions Unlimited will be a privately held Oregon Corporation. Jordan Stephan, JillynCerto, and Loren Harlo will all hold equal number shares of AEU stock.

2.2 Start-up Summary

Adventure Excursions Unlimited's start-up costs include all the equipment needed for an office,as well as the equipment needed for the mountain bike trips and white-wateradventures. Other costs will be marketing fees, website development, insurance and a depositfor the office lease.

The office equipment will consist of four computer systems, DSL router, printer, CD-RW, CPUto be used as an internal server, phones, copier, fax machine and installation of DSL and twophone lines.

The equipment needed for the mountain bike trip will be a fleet of 15 bicycles, a self containedkitchen, shower and toilet system, and bicycle tools.

The equipment for the white-water adventures will include inflatable rafts (and other requisiterelated equipment), self contained kitchen set up, portable shower and toilet facilities, and lotsof dry bags.

The marketing costs are for the brochures and advertisements. AEU will also incur costs in thedevelopment of our website. Lastly, insurance will be a large start-up expense.


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Page 5

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $2,400

Start-up Assets to Fund $57,600

Total Funding Required $60,000

Assets

Non-cash Assets from Start-up $13,000

Cash Requirements from Start-up $44,600

Additional Cash Raised $0

Cash Balance on Starting Date $44,600

Total Assets $57,600

Liabil ities and Capital

Liabil ities

Current Borrowing $0

Long-term Liabil ities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $0

Capital

Planned Investment

Jordan Stephan $20,000

Jil lyn Certo $20,000

Loren Harlo $20,000

Additional Investment Requirement $0

Total Planned Investment $60,000

Loss at Start-up (Start-up Expenses) ($2,400)

Total Capital $57,600

Total Capital and Liabil ities $57,600

Total Funding $60,000


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Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $0

Stationery etc. $50

Brochures $100

Consultants $0

Insurance $500

Rent $450

Research and Development $400

Website Development $500

Office Equipment $400

Expensed Equipment $0

Other $0

Total Start-up Expenses $2,400

Start-up Assets

Cash Required $44,600

Other Current Assets $0

Long-term Assets $13,000

Total Assets $57,600

Total Requirements $60,000

3.0 Services

AEU will position itself as a niche service provider within the hard-adventure market. It willoffer high-quality travel packages for extreme sporting trips. To begin AEU will offer six trips:helicopter-skiing trips to Canada, India, and New Zealand, white-water rafting trips to NewZealand and Costa Rica, and a mountain biking trip along the Great Divide from Montana toNew Mexico.

The target market will be made up of young professionals who work and play hard. Thesepeople can afford to play expensively, and are willing to buy time in the form of our services.AEU will serve the hard-adventure niche market as a top quality, full-service provider. AEUdefines quality by the unique aspects of the services offered. Those aspects include bookinggroup or custom trips, assistance with passports, providing top-of-the-line equipment andsupplies, and a superior service offering with access to better terrain, luxury accommodations,entertainment, celebrity exposure, and gourmet food.

The tours to be offered are as follows:

· Mountain Biking: This event will take place on the Great Divide trail from Montana toNew Mexico and is designed for the serious biker that appreciates a few of life'scomforts along the trail. Showers and gourmet meals will be provided, along withentertainment. All excursions will maintain a staff to client ratio of 1:2.

A comprehensive map system has been created by Adventure Cycling and is currentlyavailable for purchase. The map clearly indicates the route, places to camp, stores forfood and laundromats. Leadership training for the guides will be developed in-house


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using some outside material. There are many similar organizations that will be goodsources of information.

The products needed for this trip are for the most part already manufactured. One itemthat needs to be designed and built is a privacy compartment for the solar shower.This will be designed by Jordan and manufactured in-house. A cookbook collection ofsimple recipes, including some personal favorites, will also be assembled. Professionalcooks will be provided, and flown in if necessary.

· Heli-skiing: Helicopter skiing has become a popular alternative to resort skiing. Itoffers uncrowded access to the best terrain. For those who like to get off the beatenpath heli-skiing is for them. AEU has planned annual and custom trips to threedestinations. Everything will be taken care of for the customer. Transportation, lodging,transfers and skiing is included in the package. Although our trips are planned at peakski seasons, mother nature cannot be predicted. In the event that the weather is tootreacherous to ski the trip will be postponed. An in–house travel consultant willaccompany each group and take care of all check-in and transfer issues.

AEU will not send clients to places we ourselves would not go. All service providers will betop-notch professionals with accomplished backgrounds. They will be medically trained,and evaluated for knowledge and ability to ensure safety and high-quality service. If theyfail, at any time, to meet our rigid standards of quality, they will not be used. If qualityfalls, another provider will replace them. These activities take place outside of theUnited States and therefore we will hire local guides to accompany our professionalguides and service providers.

· White-water Sports: New Zealand and Costa Rica were chosen for these ten daylong hard-adventure excursions. There can be a maximum of ten people per group. Annualtrips will be planned to each location, but for large enough private groups, custom tripscan be planed. As with the heli-skiing trips, local guides will be used in addition to ourown. The abroad trips will be a cooperative effort in-house, as well as local guides inthe host countries. The choice to seek outside consulting for the trips abroad is due toeach countries different legal and regulatory climate. The potential subcontractors andguides are individuals currently in the industry in their respective countries.

4.0 Market Analysis Summary

Travel industry is an upward growth industry. There are several reasons for this increase. First, arelative healthy domestic economy over the last several years and the devaluation of currency inother regions has made travel less expensive for U.S. residents. Pleasure travel has increased by3.2% in 1999 and is predicted to grow 2.0% in 2000. Second, the healthy economy hasincreased business, which in turn boosted domestic business travel 4.8% in 1999 with anestimated increase of 3.6% in 2000.

Adventure travel is a growing segment of the travel industry. One theory of the recent increasein extreme sports has to do with the strong competitive nature of younger Americans.Statistics show that 8,000 U.S. companies (that offer adventure packages) generated $7 billionin 1999. There also has been a 66% increase in executive participation between 1996 and 2000(or an increase of 2,000 participants)(La Franco, Robert. Forbes, Feb 9, 1998 v161 n3 p168(3)).

Some quick facts:

· Adventure travelers: More than 50% of the U.S. adult traveling population, or 147


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million people, have taken an adventure trip in their lifetime (98 million in the past fiveyears). Thirty-one million adults have engaged in hard-adventure activities like white-water rafting, scuba diving and mountain biking. An additional 25 million engaged in both ahard- and soft-adventure activity. Six-percent of those who participated in adventuretrips spent more than $2,500.

· Activities most commonly participated in during adventure vacations: camping (85%),hiking (74%), skiing (51%), snorkeling or scuba diving (30%), sailing (26%), kayaking orwhite-water rafting (24%), and biking trips (24%).

· Biking vacations: Twenty-seven million travelers with customers that tend to be youngand affluent. Ages 18-34 and one-fourth are from household's w/annual income of$75,000 or above.

4.1 Market Segmentation

AEU's target customers are high income (min. $75,000 for single person), health-consciousindividuals interested in popular hard-adventure sports such as skiing, white-water sports andmountain biking. The major purchasers are located in urban areas within these United Statescities.

Customer Location (within the United States):

1. California2. Florida3. New York4. Texas5. Illinois6. Nevada7. Hawaii8. New Jersey9. Pennsylvania

10. Georgia

Hard-adventure travelers are more likely to be men. Therefore, AEU's primary target market forhard-adventure sports is men between the ages of 18-34. However an increasing number ofhard-adventure travelers are women (some statistics suggest that women comprise 49% ofthe hard-adventure market). Men, on average, spend more than women on their adventuretravels.

Customers will be reached through traditional marketing communication methods. Information hasbeen located relating to specific profiles of both hard- and soft-adventure travelers, wherethey live, work, what they do, etc. Research suggests that many of our target customers, andtravelers in general, are Internet savvy. As such, the Internet will serve as an appropriate andeffective medium of communication. Many adventure travelers purchase over the Internet or buythrough travel agents. Purchase decisions are influenced by the amount of disposable incomeheld, family issues, and the economy of a given year.

AEU will be targeting two specific groups:

1. High-income health-conscious individuals.


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2. Young, active "trustafarians."

The common elements between these two groups are money and a love for adventures. Groupone has a lot of money from income that they earn. Group two has a lot of disposable incomebecause the money was given to them, typically by members of their family. The second group,the trustafarians, is a very small group relative to the first group.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

High-income Health-conscious

Individuals

12% 1,300,000 1,456,000 1,630,720 1,826,406 2,045,575 12.00%

Young, Active Trustafarians 5% 500,000 525,000 551,250 578,813 607,754 5.00%

Other 0% 0 0 0 0 0 0.00%

Total 10.19% 1,800,000 1,981,000 2,181,970 2,405,219 2,653,329 10.19%

4.2 Target Market Segment Strategy

AEU will promote/position itself as a differentiated provider of luxury hard-adventure travel,and will price accordingly within the chosen service niche.

AEU is targeting this special population for several reasons:

1. This segment, up until now, has been underserved.2. This market segment traditionally spends a fair amount of money on adventure trips.3. This target segment seems to be willing to pay a premium for a top-shelf adventure

excursion.


Page 10

Methods of communication will include direct mail, magazine advertising, personal selling andWWW presence. Continuous magazine advertising will be costly. Initially the use of direct mail,and personal selling will be employed. These methods of communication will be tailored to reachour target segment.

4.3 Service Business Analysis

As operations progress, AEU will continue to measure our progress relative to competitors and tothe growth of the market(s) in which we operate. Though the primary target market has beendefined, there may be new possibilities to serve additional segments. As the product is defined,and the strategy differentiation is defined based on competitive strengths, AEU will be betterable to determine whether adjustments in positioning are necessary. Access to importantinformation concerning the market, competitors, etc., is available. However it is not free. For thepurposes of this project, we feel it is unnecessary to incur additional expense.

The marketing strategy will be to develop long-term relationships with customers. We will keepa database from which to obtain important demographic and psychographic information. As thebusiness becomes profitable, plans will be implemented to expand. There is virtually no limit tothe number and variety of trips AEU can provide. Trips can take place on every continent andin most countries. The goal is to establish AEU as an international provider of top-of-the-linehard-adventure travel.

4.3.1 Competition and Buying Patterns

Strengths and weaknesses of the competitors:

The competitors in this market are of two primary types. First there is the adventure providerwho specializes in a single type of hard-adventure activity such as white-water rafting. Theytypically serve clients who purchase trips for less than $2,000 (and closer to the meanpurchase price of around $900). Their strength is their expertise in a given sport. Their weaknessis that they provide an undifferentiated product in a competitive market. In addition, they do nothave the resources, ability or desire to target and/or accommodate a customer demandingmore accommodation and a more luxury/adventure-oriented service.

Companies that offer higher-priced, more luxurious packages generally provide a "soft"adventure. The activities are more along the lines of sightseeing and low-risk alternatives. Theadvantages these companies have include established reputations, extensive knowledge of theindustry, and key personnel and management. Some have been in operation for more thantwenty years. They are familiar with local service providers and have established strategicrelationships.

Disadvantages to us:

· It will be difficult to price ourselves competitively when we first enter the market.· Many of AEU's activities are seasonal. Recurring revenue will depend upon successful trips

in various regions of the world. For example, ski trips will end in April in North America.AEU will then have to move ski operations to places like Las Lenas, Argentina.

· The weather for a given year is hard to predict. Poor conditions will threaten the successof trips. Unforeseen occurrences such as inadequate snowfall could effect the viability


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of activities such as skiing and white-water sports.

Closely related competitors:

Abercrombie & Kent: A well-established, international travel provider. Their focus is mainly on"soft" adventure packages such as safaris, river tours (e.g. Amazon), trekking, sightseeing,etc. However they do offer a "Connoisseur" line of packages. These are generally pricedstarting from $4,000-7,000. Some of their packages include white-water activities and hiking,however most are touring packages.

Competing or substitute products:

There are many activities and types of travel available to people contemplating a vacation.Theme parks, motorhome trips, and cruises are just a few. Substitutes could include lessexpensive, self-planned trips, trips geared towards soft-travel, adventure trips involvinghunting or fishing as primary activities, or exclusive adventure trips such as personal submarinetours of the Titanic or a trip around the world in a Leer Jet. Many activities that take placeoutside and involve some level of risk could be seen as hard-adventure competition.

Another alternative is to do nothing. Consumers do not have to vacation. They may opt tospend the money they would have otherwise spent on a vacation on something else.

5.0 Strategy and Implementation Summary

Adventure Excursions Unlimited will be going after the upper-end of the hard-adventuremarket. This market up until now has been underserved, there are hard-adventure tourcompanies, but none that are catering to the high-end spectrum. With the adventuringtraveling industry steadily increasing, AEU sees a unique opportunity.

AEU's main objective in its marketing and sales activity is to make the impression onprospective customers that AEU offers a higher level of service relative to any other providerof hard-adventure tours. This will be communicated through all of the different media that weuse. If AEU can make the impression that our trips are truly different and superior, then ourresearch indicates that there will be steady demand.

Once AEU has clients signed up and participating on our trips, it will rely on superior customerattention and service to impress and retain c lients for future trips. Developing long-termrelationships will be the key to steady growth.

5.1 Competitive Edge

The competitive edge in our services is the access we provide to popular "hard" adventuresports without the budget constraint of typical travelers. That is, most travelers are looking tospend less than "hard" adventure sports without the budget constraint of typical travelers.The majority of providers cater to these people. Adventure Excursions Unlimited intends to usethe same service providers but provide more exclusive trips. Accommodations will be primarily insmall luxury hotels and resorts. Meals will be exceptional, more like gourmet cuisine. In addition,the adventure activities will be better than average because the clients have more money. Theywon't get stuck with people they don't like; they will get access to the best terrain, sectionsof rivers, etc. AEU's activities are very popular. AEU's target market has no problem spending


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$4,000 per week on heli-skiing. Moreover, they generally make this type of activity an annualevent.

5.2 Sales Strategy

The sales strategy is to create long-term relationships with customers through superiorservice. The intent is to initially target the primary customer group. This group has beendefined as persons who have purchased, or are likely to purchase, a "hard-adventure" vacationfor over $2,500.

The trips planned are designed with the wealthy adventure traveler in mind. Later marketingefforts may include trips geared towards corporate clients, Eco-tourism or hard-adventure tripsfor people who want to spend less money. Target customers will be identified through standardresearch methods. There are a number of publications available that contain profiles ofAdventure travelers.

Methods by which we will contact customers will depend on results of marketing/salesresearch. We will likely use trade or special interest magazines, direct mail, Web-basedcommunication, and personal selling. In addition printed materials will be made available tocustomers through travel agencies that cater to the adventure target market. Initially, servicewill be introduced regionally, and possibly nationally. Sales will be extended into the globalmarket within a few years of operation.

Our services are seasonal. Recurring revenue will be dependent upon successful trips involvinga variety of activities offered year-round. We hope to promote out of season services throughfrequent customer contact and our own publication, most likely a magazine of some sort. We willreview up-and-coming trips, offer highlights of past trips and try to do other creative articles,giveaways, customer profiles, etc.

Most sales will occur at the retail level. The sales that occur between customers and travelagencies will be discounted appropriately, approximately 15%. Transactions will occur as theresult of customer contact in response to communication efforts. In addition, AEU will engagein personal selling.

5.2.1 Sales Forecast

The following charts and table shows AEU's expected sales forecast.


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Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

Sales

Heli-skiing $360,000 $500,000 $570,000

White-water Rafting $140,000 $260,000 $310,000

Mountain Biking $100,000 $200,000 $240,000

Other $0 $0 $0

Total Sales $600,000 $960,000 $1,120,000

Direct Cost of Sales Year 1 Year 2 Year 3

Heli-skiing $0 $0 $0

White-water Rafting $40,000 $70,000 $78,000

Mountain Biking $28,000 $50,000 $64,000

Other $0 $0 $0

Subtotal Direct Cost of Sales $68,000 $120,000 $142,000

5.3 Milestones

Adventure Excursions Unlimited will have several milestones early on:

1. Business plan completion. This will serve as a roadmap for the organization. While AEUdoes not need a business plan to raise capital, it will be an indispensable tool for theongoing performance and improvement of the company.

2. Set up the office. This will be the main/only office located in Eugene, OR.3. Develop the training program. This program will be used to train the leaders of our trips.4. Completion of first trip.5. Completion of twentieth trip.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business Plan Completion 1/1/2001 1/21/2001 $0 Jordan Marketing

Office Set-up 1/1/2001 2/1/2001 $0 Jillyn Department

Develop Leadership Training

Program

2/1/2001 3/1/2001 $0 Jordan Department

Completion of First Trip 4/1/2001 5/1/2001 $0 Loren Department

Completion of 20th Trip 4/1/2002 5/1/2002 $0 Loren Department

Totals $0


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6.0 Management Summary

The three founders of AEU are Jordan Stephan, Jillyn Certo, and Loren Harlo. They will occupymanagement roles within AEU, as well as being the specialist in at least one type of hard-adventure activity and being responsible for the management and operation of key functionalareas.

Jordan Stephan, VP, Corporate Council, Business Development, and Mountain BikingActivity Supervisor: Jordan received his Bachelor of Arts in philosophy from Washington andJefferson College in Washington, PA. While there, he was president of the Washington andJefferson Cycling Club and Team for two years. He completed his Master of BusinessManagement/Doctor of Jurisprudence, joint degree program at Willamette University where hehas served as the secretary of the Environmental Law Society, and chairperson for theWillamette University Public Interest Law Project (WUPILP). As chairperson, Jordan supervisedtwenty-five staff members and raised $14,000. Jordan has also managed a bicycle shop fortwo years. Following graduate school, Jordan worked for Counterclaim.com where Jordan didbusiness development, organizational development, and other management activities. He isresponsible for all logistics on the mountain bike trips.

Jordan's expertise in mountain bike trip logistics comes from years of cycle touring. Jordan hascycled across the country and around the Upper Peninsula of Michigan and Vermont. Jordanhas also done a great deal of backpacking, backcountry hiking and snowshoeing. He hasserved as a consultant on many long-distance bicycle tours in the United States and abroad.In addition to his role as logistical planner, Jordan will be responsible for part-manufacturing forthe mountain bike trips as he has manufacturing expertise from several years of design andimprovement experience with outdoor gear.

Jordan's extra curricular activities are based upon his love for the outdoors. He has been acompetitive cyclist and runner for the last five years. He competes in cycling road races,


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endurance mountain bike races, and road/trail running races up to half-marathons. His currentfavorite activity is the duathlon or run/bike/run events. He would like to combine hisexperience and education with his love for the outdoors. The AEU business concept is areflection of this desire.

Jillyn Certo, VP, Human Resource Manager/Corporate Trainer, and Ski-trip Coordinator:Jillyn graduated with two Bachelor of Science Degrees, one in corporate and industrial fitnessand the other in occupational safety, from Oregon State University in 1991. Jillyn completedher MBA work at Atkinson Graduate School of Management in 1998. She has six years experiencein the field of safety. After Atkinson Jillyn worked at Nike as a human resource specialist. Herinterests include scuba diving and downhill skiing. Jillyn has competed in track & field as well asin horse shows and barrel racing. Along with her interest in sports, Jillyn has a variety ofexperience with business and pleasure travel. Jillyn will supervise the training of our leaders.

Loren Harlo, Marketing Manager and White-water Adventure Coordinator: Loren istwenty-seven years old. He received his Bachelor degree in psychology from Western Collegeand graduated Magna cum Laude. He will complete his Master of Business Administration degree(with an emphasis in marketing) in 1998. Following graduate school, Loren worked for BurleyCooperative as a marketing manager. Loren has been active in athletics for twenty-years. Heplayed football at the grade school, high school and college level, as well as basketball, trackand field, and competition karate. He is an avid outdoorsman with a passion for water sports,skiing, hiking, hunting and fishing. He has recently taken up kayaking. Loren gained self-employment and management experience as an independent contractor for the Union PacificRailroad. He has also managed and operated a small restaurant. He has always planned to ownhis own business and realized, while working independently, that he needed the knowledge ofbusiness management that an MBA program could provide.

Though the founding members intend to take an active role in the operation of AEU, additionalmanagement will be sought out. AEU is open to assistance from experienced managersassociated with venture capital providers.

6.1 Personnel Plan

The following table shows the personnel plan for AEU.

Table: Personnel

Personnel Plan


Jordan Stephan $30,000 $30,000 $30,000

Jil lyn Certo $30,000 $30,000 $30,000

Loren Harlo $30,000 $30,000 $30,000

Mountain Bike Trip Personnel $70,000 $150,000 $170,000

Heli-skiing Personnel $120,000 $170,000 $200,000

White-water Adventure Personnel $70,000 $125,000 $155,000

Secretary $18,000 $0 $0

Total People 4 19 19

Total Payroll $368,000 $535,000 $615,000


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7.0 Financial Plan

The following subtopics will provide more financial information.

7.1 Projected Cash Flow

The following chart and table indicates projected cash flow.

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $600,000 $960,000 $1,120,000

Subtotal Cash from Operations $600,000 $960,000 $1,120,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $600,000 $960,000 $1,120,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $368,000 $535,000 $615,000

Bill Payments $168,145 $245,468 $305,745

Subtotal Spent on Operations $536,145 $780,468 $920,745

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabil ities Principal Repayment $0 $0 $0

Long-term Liabil ities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $536,145 $780,468 $920,745

Net Cash Flow $63,855 $179,532 $199,255

Cash Balance $108,455 $287,987 $487,243


Page 18

7.2 Important Assumptions

See the following table for general assumptions.

Table: General Assumptions

General Assumptions


Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

7.3 Break-even Analysis

This Break-even Analysis table and chart, below, project the figures for monthly sales breakeven.


Page 19

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $43,114

Assumptions:

Average Percent Variable Cost 11%

Estimated Monthly Fixed Cost $38,228

7.4 Projected Profit and Loss

The following table indicates the projected profit and loss.


Page 20


Page 21

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $600,000 $960,000 $1,120,000

Direct Cost of Sales $68,000 $120,000 $142,000

Other $0 $0 $0

Total Cost of Sales $68,000 $120,000 $142,000

Gross Margin $532,000 $840,000 $978,000

Gross Margin % 88.67% 87.50% 87.32%

Expenses

Payroll $368,000 $535,000 $615,000

Sales and Marketing and Other Expenses $21,000 $0 $0

Depreciation $4,332 $4,332 $4,332

Leased Equipment $0 $0 $0

Util ities $0 $0 $0

Insurance $4,800 $4,800 $4,800

Rent $5,400 $5,400 $5,400

Payroll Taxes $55,200 $80,250 $92,250

Other $0 $0 $0

Total Operating Expenses $458,732 $629,782 $721,782

Profit Before Interest and Taxes $73,268 $210,218 $256,218

EBITDA $77,600 $214,550 $260,550

Interest Expense $0 $0 $0

Taxes Incurred $17,825 $52,555 $65,122

Net Profit $55,443 $157,664 $191,096

Net Profit/Sales 9.24% 16.42% 17.06%


Page 22


Page 23

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current Assets

Cash $108,455 $287,987 $487,243

Other Current Assets $0 $0 $0

Total Current Assets $108,455 $287,987 $487,243

Long-term Assets

Long-term Assets $13,000 $13,000 $13,000

Accumulated Depreciation $4,332 $8,664 $12,996

Total Long-term Assets $8,668 $4,336 $4

Total Assets $117,123 $292,323 $487,247

Liabil ities and Capital Year 1 Year 2 Year 3

Current Liabil ities

Accounts Payable $4,080 $21,617 $25,444

Current Borrowing $0 $0 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $4,080 $21,617 $25,444

Long-term Liabil ities $0 $0 $0

Total Liabil ities $4,080 $21,617 $25,444

Paid-in Capital $60,000 $60,000 $60,000

Retained Earnings ($2,400) $53,043 $210,706

Earnings $55,443 $157,664 $191,096

Total Capital $113,043 $270,706 $461,802

Total Liabil ities and Capital $117,123 $292,323 $487,247

Net Worth $113,043 $270,706 $461,802


Page 24

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on theStandard Industrial Classification (SIC) code 4725, Tour Operators, are shown for comparison.


Page 25

Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profi le

Sales Growth n.a. 60.00% 16.67% 4.00%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 42.80%

Total Current Assets 92.60% 98.52% 100.00% 65.80%

Long-term Assets 7.40% 1.48% 0.00% 34.20%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 3.48% 7.39% 5.22% 33.10%

Long-term Liabil ities 0.00% 0.00% 0.00% 16.40%

Total Liabil ities 3.48% 7.39% 5.22% 49.50%

Net Worth 96.52% 92.61% 94.78% 50.50%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 88.67% 87.50% 87.32% 40.10%

Selling, General & Administrative Expenses 79.51% 71.08% 70.16% 30.80%

Advertising Expenses 0.00% 0.00% 0.00% 0.80%

Profit Before Interest and Taxes 12.21% 21.90% 22.88% 1.20%

Main Ratios

Current 26.58 13.32 19.15 1.66

Quick 26.58 13.32 19.15 1.29

Total Debt to Total Assets 3.48% 7.39% 5.22% 49.50%

Pre-tax Return on Net Worth 64.81% 77.66% 55.48% 2.70%

Pre-tax Return on Assets 62.56% 71.91% 52.58% 5.30%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 9.24% 16.42% 17.06% n.a

Return on Equity 49.05% 58.24% 41.38% n.a

Activity Ratios

Accounts Payable Turnover 42.21 12.17 12.17 n.a

Payment Days 33 18 28 n.a

Total Asset Turnover 5.12 3.28 2.30 n.a

Debt Ratios

Debt to Net Worth 0.04 0.08 0.06 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital $104,375 $266,370 $461,798 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.20 0.30 0.44 n.a

Current Debt/Total Assets 3% 7% 5% n.a

Acid Test 26.58 13.32 19.15 n.a

Sales/Net Worth 5.31 3.55 2.43 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales

Heli-skiing 0% $0 $0 $0 $0 $0 $120,000 $0 $0 $120,000 $120,000 $0 $0

White-water Rafting 0% $0 $0 $0 $0 $0 $0 $0 $70,000 $0 $70,000 $0 $0

Mountain Biking 0% $0 $0 $0 $0 $0 $0 $50,000 $50,000 $0 $0 $0 $0

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Heli-skiing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

White-water Rafting $0 $0 $0 $0 $0 $0 $0 $20,000 $0 $20,000 $0 $0

Mountain Biking $0 $0 $0 $0 $0 $0 $14,000 $14,000 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

Appendix

Page 2

Table: Personnel

Personnel Plan


Jordan Stephan 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Jillyn Certo 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Loren Harlo 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Mountain Bike Trip Personnel 0% $0 $0 $0 $0 $0 $0 $35,000 $35,000 $0 $0 $0 $0

Heli-skiing Personnel 0% $0 $0 $0 $0 $0 $40,000 $0 $0 $40,000 $40,000 $0 $0

White-water Adventure Personnel 0% $0 $0 $0 $0 $0 $0 $0 $35,000 $0 $35,000 $0 $0

Secretary 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Total People 3 3 3 4 4 9 9 14 9 14 4 4

Total Payroll $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

Appendix

Page 3

Table: General Assumptions

General Assumptions


Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Direct Cost of Sales $0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $0 $0 $0 $0 $14,000 $34,000 $0 $20,000 $0 $0

Gross Margin $0 $0 $0 $0 $0 $120,000 $36,000 $86,000 $120,000 $170,000 $0 $0

Gross Margin % 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 72.00% 71.67% 100.00% 89.47% 0.00% 0.00%

Expenses

Payroll $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

Sales and Marketing and Other

Expenses

$0 $0 $0 $0 $0 $5,000 $1,500 $3,000 $5,000 $6,500 $0 $0

Depreciation $361 $361 $361 $361 $361 $361 $361 $361 $361 $361 $361 $361

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Rent $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450

Payroll Taxes 15% $1,125 $1,125 $1,125 $1,425 $1,425 $7,425 $6,675 $11,925 $7,425 $12,675 $1,425 $1,425

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $9,836 $9,836 $9,836 $12,136 $12,136 $63,136 $53,886 $95,636 $63,136 $104,886 $12,136 $12,136

Profit Before Interest and Taxes ($9,836) ($9,836) ($9,836) ($12,136) ($12,136) $56,864 ($17,886) ($9,636) $56,864 $65,114 ($12,136) ($12,136)

EBITDA ($9,475) ($9,475) ($9,475) ($11,775) ($11,775) $57,225 ($17,525) ($9,275) $57,225 $65,475 ($11,775) ($11,775)

Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Taxes Incurred ($2,951) ($2,459) ($2,459) ($3,034) ($3,034) $14,216 ($4,472) ($2,409) $14,216 $16,279 ($3,034) ($3,034)

Net Profit ($6,885) ($7,377) ($7,377) ($9,102) ($9,102) $42,648 ($13,415) ($7,227) $42,648 $48,836 ($9,102) ($9,102)

Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 0.00% 35.54% -26.83% -6.02% 35.54% 25.70% 0.00% 0.00%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Subtotal Cash from Operations $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $0 $0 $0 $0 $120,000 $50,000 $120,000 $120,000 $190,000 $0 $0

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $7,500 $7,500 $7,500 $9,500 $9,500 $49,500 $44,500 $79,500 $49,500 $84,500 $9,500 $9,500

Bill Payments ($976) ($1,427) ($952) ($1,227) ($1,493) $183 $27,193 $19,514 $46,704 $28,451 $53,668 ($1,493)

Subtotal Spent on Operations $6,524 $6,073 $6,548 $8,273 $8,007 $49,683 $71,693 $99,014 $96,204 $112,951 $63,168 $8,007

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $6,524 $6,073 $6,548 $8,273 $8,007 $49,683 $71,693 $99,014 $96,204 $112,951 $63,168 $8,007

Net Cash Flow ($6,524) ($6,073) ($6,548) ($8,273) ($8,007) $70,317 ($21,693) $20,986 $23,797 $77,049 ($63,168) ($8,007)

Cash Balance $38,076 $32,003 $25,455 $17,182 $9,175 $79,492 $57,799 $78,785 $102,581 $179,630 $116,462 $108,455

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $44,600 $38,076 $32,003 $25,455 $17,182 $9,175 $79,492 $57,799 $78,785 $102,581 $179,630 $116,462 $108,455

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $44,600 $38,076 $32,003 $25,455 $17,182 $9,175 $79,492 $57,799 $78,785 $102,581 $179,630 $116,462 $108,455

Long-term Assets

Long-term Assets $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000

Accumulated Depreciation $0 $361 $722 $1,083 $1,444 $1,805 $2,166 $2,527 $2,888 $3,249 $3,610 $3,971 $4,332

Total Long-term Assets $13,000 $12,639 $12,278 $11,917 $11,556 $11,195 $10,834 $10,473 $10,112 $9,751 $9,390 $9,029 $8,668

Total Assets $57,600 $50,715 $44,281 $37,372 $28,738 $20,370 $90,326 $68,272 $88,897 $112,332 $189,020 $125,491 $117,123

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Payable $0 $0 $943 $1,411 $1,879 $2,613 $29,921 $21,281 $49,134 $29,921 $57,773 $3,346 $4,080

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $0 $943 $1,411 $1,879 $2,613 $29,921 $21,281 $49,134 $29,921 $57,773 $3,346 $4,080

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Liabilities $0 $0 $943 $1,411 $1,879 $2,613 $29,921 $21,281 $49,134 $29,921 $57,773 $3,346 $4,080

Paid-in Capital $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000 $60,000

Retained Earnings ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400) ($2,400)

Earnings $0 ($6,885) ($14,262) ($21,639) ($30,741) ($39,843) $2,805 ($10,610) ($17,837) $24,811 $73,647 $64,545 $55,443

Total Capital $57,600 $50,715 $43,338 $35,961 $26,859 $17,757 $60,405 $46,990 $39,763 $82,411 $131,247 $122,145 $113,043

Total Liabilities and Capital $57,600 $50,715 $44,281 $37,372 $28,738 $20,370 $90,326 $68,272 $88,897 $112,332 $189,020 $125,491 $117,123

Net Worth $57,600 $50,715 $43,338 $35,961 $26,859 $17,757 $60,405 $46,990 $39,763 $82,411 $131,247 $122,145 $113,043

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